PROJECT

Projects

Summary of Investment Information

Project Number

35344

Company Name

CARD BANK. INC.

Date SPI Disclosed

May 20, 2015

Country

Philippines

Region

East Asia and the Pacific

Projected Board Date

Jun 22, 2015

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jan 25, 2023

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Jun 24, 2015
Signed : Dec 14, 2015
Invested : Dec 22, 2015

Sector

Commercial Banking - Microfinance

Project Description

The Project is to provide a senior loan of up to PHP700 million (US$16 million equivalent) to CARD Bank, Inc. (“CARD Bank”) and CARD SME Bank, Inc. (“CARD SME”), of which (i) up to PHP540 million (US$12 million) to CARD Bank and (ii) up to PHP160 million (US$4 million) senior loan to CARD SME, with maturity of up to 7 years (including 1 year grace period). Both CARD Bank and CARD SME are important lenders to the underbanked rural MSME sector in the Philippines. Through the investment IFC will support CARD Bank and CARD SME to expand their services in order to provide micro finance solutions to small businesses and individuals in rural areas.

CARD Bank, Inc. was set up in September 1997 and now is the largest microfinance institution in the Philippines with a customer base of 1.4 million of which around 90% are women. CARD Bank offers a range of products for the micro-entrepreneurs such as savings and loan products and micro-insurance through a distribution network of 61 branches/area/regional offices and 380 office units/service units throughout the country as of March 2015.

CARD SME Bank, Inc. formerly known as the Rural Bank of Sto. Tomas (Batangas), Inc. (RBSTI), started operations in 1962. CARD SME’s customers are comprised primarily of customers who have “graduated” from the microfinance bank, CARD Bank. CARD SME helps facilitate the transition of these micro-entrepreneurs to small businesses and addresses a gap not being filled by the commercial banks, as these microfinance clients build capacity and eventually graduate to SMEs. CARD SME also services the micro-entrepreneurs in the area where CARD SME’s branches are located. As of March 2015, CARD SME had 11 branches/area/regional offices and 120 office units/service units servicing 228 thousand clients.

Associated Advisory Engagement

IFC Advisory Services signed a cooperation agreement with CARD Bank in 2007 (550225) to develop an SME lending platform. This engagement covered a technical advisory for CARD to put up an SME operation – from risk assessment and credit scoring to marketing and strategy. When RBSTI (CARD SME) was acquired in 2008, all the SME loans were then booked under this entity. The original agreement, which expired in 2010, was extended by one year to 2011 (550225). The second phase focused on refining the initiatives made during the first phase of the advisory, such as their credit scoring tool, portfolio scoring tool, features of the loan products and trainings. In July 2013, IFC signed a cooperation agreement with CARD SME on agri-finance advisory (577567). The advisory will help CARD SME design and rollout an agri-finance strategy in the Philippines. Part of the engagement involves evaluation of lending opportunities in selected agricultural value chains and then testing this through the implementation of an agricultural lending pilot. In April 2014, IFC also signed a cooperation agreement with CARD – Pioneer Microinsurance and CARD, Inc. (599889). The project aims to assist CARD – Pioneer to create an index-based portfolio insurance product, and further develop an existing indemnity insurance product being rolled out in CARD Inc. to address typhoon-related risks faced by both lenders and farmers. In January 2015, IFC signed a phase II agri-finance cooperation agreement with CARD SME (577567). The project aims to support CARD SME in rolling out the agri-finance business model introduced in the first advisory to 4 other branches. The approach will allow CARD SME to expand its financial services into target regions, and reach more farmers and value chain players in different commodities. The project is also expected to increase loan officer productivity and capacity in assessing risks in agri-finance.

Sponsor / Cost / Location

Development Impact

E&S Category Rationale / Risks and Mitigation